Subscribe Feed (RSS)Dot Com Lifestyle: Buy Stocks
by FV | Filed under Dot com lifestyle, Make money online.
Most of us who SOHO at home really need to diversify our resources. Purchasing stocks is a good option. However buy at the bottom and sell at the top is REALLY a simple advice?
In practice, buying low and selling high requires substantial amount of discipline and patience. Investors need to overcome the fear at bear bottom and greed during bull market in order to be a contrarian.
By going against the crowd, there is some value added. It is definitely better than holding to some dead stocks and not doing anything for years.
Trading on any stock market be it NASDAQ or Bursa Malaysia is particularly crucial on stocks whose profits correlate highly with the fluctuation of their product prices or the cycle of a particular industry.
Typical examples of cyclical stocks are property stocks, construction and building material stocks, plantation stocks, stockbroking firms, tech stocks, warrants, political-linked stocks, speculative third liners, situational and conceptual stocks.
These stocks are not advisable to be held for long, and they must be disposed of at certain points in time. They are generally higher beta stocks which make them the ideal candidates for trading purposes.
Foreign fund managers investing in emerging markets also like to trade on these stocks due to the high potential capital gain but eventually they will sell them causing the share price to collapse. When the time is ripe for the next cycle, several years down the road, these foreign fund managers will come back and paint a rosy picture again to lure unsuspecting and greedy punters into the game again.
It is a conceptual game with a theme so that more people will jump onto the bandwagon to join in the game — some will make money along the way while many will be caught eventually.
Perhaps only a handful of solid blue chips with very stable earnings base can be kept for long term. Presently, some of such resilient stocks in current bearish market are Public Bank, DiGi, F&N, Nestle and Amway. It should be noted that there is no guarantee that a resilient stock today backed by strong fundamentals may not fall in the next bear market.
Don’t bother the posts below, but if you are free, why not?
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